Are Homes in Flood Zones Really at Risk for Significant Property Loss, Or Is it Just Hype?

Diego School of Business, and affiliated with the Burnham-Moores Center for Real Estate, and Michael Sklarz, PhD, president of Collateral Analytics, the housing market does not appear to negatively react to homes within flood risk areas, as scientists and other academics have claimed.

In this paper, titled “The Impact of Waterfront Location on Residential Home Values Considering Flood Risks,” Miller and Sklarz analyzed a large dataset of residential properties along oceans, bays and large lakes across the U.S. and examined price trends before and after major storms.

Unlike many recent studies focused on the potential damage from climate change, Miller and Sklarz found inconsistent evidence that the market perceives the risks of floods as a long-term deterrent and found minimal or no discounts on property prices for waterfront properties after a brief hiatus of downturn. They determined that after a major hurricane or flood, “home prices rebound quickly, with very few long-term impacts on value.”

The authors identified and analyzed approximately 1.2 million waterfront residential properties across the U.S. (as of 2018) and combined that data with several million transactions within those same zip codes to estimate “net waterfront effects on value.”

Miller and Sklarz determined that in most markets throughout the U.S., waterfront or near waterfront properties continue to demand significant price premiums even with concerns over flood risks, with oceanfront garnering a 45% premium on average.

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The University of San Diego sets the standard for an engaged, contemporary Catholic university where innovative Changemakers confront humanity’s urgent challenges. With more than 8,000 students from 75 countries and 44 states, USD is the youngest independent institution on the U.S. News & World Report list of top 100 universities in the United States. USD’s eight academic divisions include the College of Arts and Sciences, the School of Business, the Shiley-Marcos School of Engineering, the School of Law, the School of Leadership and Education Sciences, the Hahn School of Nursing and Health Science, the Joan B. Kroc School of Peace Studies, and the Division of Professional and Continuing Education. USD recently concluded our successful $317M Leading Change: The Campaign for USD, which represented the most ambitious fundraising effort in the history of the university. In September 2016, USD introduced Envisioning 2024, a strategic plan that capitalizes on the university’s recent progress and aligns new strategic goals with current strengths to help shape a vision for the future as the university looks ahead to its 75th anniversary in the year 2024.


Kimberly Malasky
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